JACKSON PIJRCHASE ENERGY CORPORATION cases/2007-00116/JPEC... · 2007. 12. 7. · JACKSON PIJRCHASE...

JACKSON PIJRCHASE ENERGY CORPORATION

Kentucky Public Service Commission Case No. 2007-001 16

Application For General Rate Increase

E x h ib i t I

1,xhibit J

Exhibit I<

Exhibit L

EA1 i b i t M

Exhibit N

Exhibit 0

Exhibit P

Exhibit Q

Exhibit R

Exhibit S

Exhibits T and T-1

Exhibit U Exhibit V

Exhibit W

Exh i b i t X

Exhih i t Y

Exhibit 2.

Exhibit AA

Table of Contents - Volume 3 o f 3

Effect of New Rates on JPEC Revenue - Revenue Comparison

Effect of Proposed Increase on Average Bills

Comparison of Existing and Proposed Average Bills

Coverage Ratios

Reconciliation of Rate Base to Capital Structure

Chart of Accounts Proscribed by Dept. of Agriculture - Rural Utilities Service

Independent Auditor’s Report

Depreciation Study

Computer Software Used i n Compilation of This Application and Related Materials

Annual Report to Members for 2005 and 2006

Monthly RUS Form 7 (January, 2006 -June, 2007)

Cost of Service Study(s)

Income Statement & Balance Sheet with Normalizing Adjustments

Bylaws of Jacl<son Purcliase Energy Corporation

Capital Construction Budgets - 2006 and 2007

2007 Operating Budget

Capital Credits

Notice to PSC of Filing Application and Aclcnowledgenient froin PSC

9/27/07 Resolution of JPEC Board of Directors - Rate Increase

Exhibit I

Effect of New Rates on JPEC Revenue -- Revenue Comparison

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Exhibit J

Effect of Proposed Increase on Average Bills

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Comparison of Existing and Proposed Average Bills

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Exhibit L,

Coverage Ratios

Line No.

Exhibit L, Page 1 of 1

Witness: William K. Edwards

JPEC Earned & Proposed Returns On Rate Base and Capitalization

Normalized Normalized 2006 2006 2006

As Booked W/O Increase With Increase 1 Net Margins ($107,540 j ($840,021) $2,7 14,043

3 Interest On Long-Term Debt $2,660,5 17 $2,714,043 $2,714,043 4 $2,552,977 $1,874,022 $5,428,086

2 Non-Cash Patronage Dividends $0 $0 $0

5 Average Rate Base 6 Rate of Return On Rate Base

7 Average Capitalization 8 Rate of Return On Capitalization

$77,733,649 $77,270,037 $77,270,037 3.28% 2.43% 7.02%

$80,637,061 $80,637,061 $80,637,061 3.17% 2.32% 6.73%

9 Net TIER Coverage Ratio 0.96 0.69 2.00

10 Modified Debt Service Coverage Ratio 1.23 1.21 1.96

Exhibit M

Reconciliation of Rate Base to Capital Structure

Exhibit M Page 1 of I

Witness: William K. Edwards

' Reconciliation of JPEC Test Year Rate Base to Capitalization

Capitalization

Accumulated Operating Provisions Accounts Payable Consumer Deposits Other Current and Accrued Expenses Deferred Credits

Investment In Associated Companies Cash and Cash Equivalents Accounts Recievables Unbilled Accrual Materials & Supplies Prepayments Deferred Debits

Diff of Net Plant From Avg. to End of Year Materials 8 Supplies (1 3 Mo. Avg.) Prepayments (13 Mo. Avg.) Deferred Debits (13 Mo. Avg.) Cash Working Capital Customer Deposits (13 Mo. Avg.) Deferred Credits (13 Mo. Avg.) Rate Base

$861,127 $3,140,559 $1,251,047

$756,807

(2,037,879) ($3,665,763) ($2,301,010) ($1,668,277)

($466,211) ($i,ia3,096)

- 1$1,291,2151 $76,752,404

($2,252,136) $1,683,183

$1,390,539 $1,059,701

$429,880

($1,119,209) ($1 75,052)

$77.769.31 1

Exhibit N

Chart of Accounts Proscribed by Department of Agriculture - Rural Utilities Service

Exhibit N page 1 of 9

I I 9-__

Jackson Purchase Energy Corporation Case No. 2007-001 16

General Ledger Trial Balance -----

__ - December 31,2006

I -

I I Account -__I___ Present Balance Present Balance Number Description Debit Credit

1 102.000 ELECTRIC PLANT PURCHASED $0.00 $0.00 2 107.100 CONSTRUCTION WIP- CONTRACTORS $534,274.53 $0.00 3 107.120 WIP - FUTURE SUB-STATIONS $67,784.06 $0.00 4 107.130 WIP - LONG RANGE WORK PLAN $40,881 -75 $0.00 5 107.200 - CWIP-JACKSON PURCHASE CREWS $2,597,235.92 $0.00

7 107.300 WIP SPECIAL EQUIPMENT $0.00 $0.00 8 107.400 CIP - FAS 106 IMPLEMENTATION $0.00 $0.00 9 108.600 ACCUM DEPR FOR DISTRIBUTION PLANT ~ $0.00 $0.00

6 107.231 CONTRIBUTIONS IN AID - CONSTRUCTION $0.00 $72,830.51

$0.00 $1,264,923.01 11 108.664 ACCUM DEPR-POLES, TOWERS, &T%KME- $0.00 $1 0,628,841.71 12 108.665 ACCUM DEPR-O/H CONDUCTOR & DEVICES $0.00 $5,642,593.1 8 13 108.666 ACCUM DEPR-UNDERGOUND CONDUIT $0.00 $652,016.38 14 108.667 ACCUM DEPR-U/G CONDUCTOR & DEVICES $0.00 $2,448,410.75 15 108.668 ACCUM DEPR-LINE TRANSFORMERS $0.00 $3,610,938.32 16 108.669 ACCUM DEPR- SERVICES $0.00 $2,415,868.34 17 108.670 ACCUM DEPR-METERS $0.00 $1,163,276.09

10 108.662 ACCUM DEPR-STATION EQUIPMENT

--.

118 19 20 21 22 23 24 25

- 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 i 43

108.671 ACCUM DEPR-INSTALLATIONS ON CUST PR $0.00 $668,690.09

108.673 ACCUM DEPR-STREET LIGHT & SIGN $0.00 $1 03,136.37 108.710 ACCUM DEPR FOR OFFICE FURN. & EQUIP $0.00 $177,198.33 108.71 1 ACC DEPR FOR COMPUTER EQUlPlSOFTWRE $0.00 $242,530.76

108.716 CONTRA ACCUM DEPR - COMPUTERS $0.00 $66,485.62 108.720 ACCUM DEPR - UTILITY TRANSP. EQUIP. $0.00 $91 8,599.97 108.721 ACCUM DEPR - LIGHT DUTY TRANS EQUIP $0.00 $223,422.55

108.730 ACCUM DEPR FOR STRUCTURES & IMPROVE $0.00 $1,203,592.74 108.735 CONTRA - ACCUM DEPR STRUCT & IMPRV - $0.00 $44,206.69 108.740 ACCUM DEPR FOR SHOP EQUIPMENT $0.00 $31 0,882.69

108.750 ACCUM DEPR FOR LABORTORY EQUIPMENT $0.00 -~ $1 21,303.30

108.760 ACCUM DEPR FOR COMMUNICATIONS EQUIP $0.00 $21 4,538.75

108.770 ACCUM DEPR FOR STORES EQUIPMENT -- $0.00 $57,257.95

108.780 ACCUM DEPR FOR MISCELLANEOUS EQUIP -___ $0.00 $57,972.91

108.790 ACCUM DEPR FOR POWER OPERATED EQUIP $0.00 $48,826.1 4 108.791 ACCUM DEPR - PWR EQUIP TRENCHER,ETC $0.00 $1 11,969.68 108.795 CONTRA ACCUM DEPR - POWER OPERATED $0.00 $17.83

108.672 ACCUM DEPR-LEASED PROP CUST PREMISE $1 01,973.25 $0.00

108.715 CONTRA ACCUM DEPR -OFFICE FURNITURE $9,939.61 $0.00

108.723 ACCUM DEPR - CONTRA TRANSP. EQUIP $241,081.40 $0.00

108.745 CONTRA -ACCUM DEPR - TOOLS, SHOP $33,107.34 $0.00

108.755 CONTRA ACCUM DEPR - LABORATORY $8,206.60 $0.00

108.765 CONTRA ACCUM DEPR - COMMUNICATION $278,584.48 $0.00

108.775 CONTRA ACCUM DEPR * STORES $4,113.99 $0.00

108.785 CONTRA - ACCUM DEPR - MlSC EQUIP. $6,217.41 $0.00

108.800 RETIRE. WIP-JPECC CREWS $1 9,616.1 9 $0.00


Account Number

I Jackson Purchase Energy Corporation -

General Ledger Trial Balance - Case No. 2007-001 16

December 31,2006 ---

Present Balance Present Balance Description Debit Credit

44 45 46 47

108.81 0 RETIRE. WIP-CONTRACTORS $17,092.61 $0.00 123.100 PATRONAGE CAPITAL FROM ASSOC. COOPS $461,448.24 $0.00 123.220 INVESTMENTS IN CAP TERM CERT - CFC $946,546.20 $0.00 123.230 OTHER INVEST IN ASSOC ORGANIZATIONS $1.040.00 $0.00

48 123.231 OTHER INVEST-KAEC PCB DETOX CERT $5;000.00 $0.00 49 123.240 INVEST-CLASS "C" & " E STOCK-COBANK $623,844.48 $0.00 50 124.000 CFC COMMERCIAL PAPER RECEIVABLE $0.00 $0.00 51 128.000 SPEC FUNDS-DEFERRED COMPENSATION $1 00,645.26 $0.00 52 131.100 CASH-GEN FUNDS-PADUCAH BANK & TRUST $644,778.23 $0.00 53 131.210 CASH-RUS CONSTRUCTION FUND-PAD BK $32.50 $0.00 54 131.400 CASH IN TRANSIT-CREDIT CARDS $1 6,445.34 $0.00 -

56 131.530 CASH ITEMSIITEMS TO RESEARCH ~~- $0.00 $0.00 57 135.000 WORKING FUNDS $1,700.00 $0.00 58 - 136.000 TEMPORARY CASH INVESTMENTS $3,000,000.00 $0.00 59 142.1 10 ACCTS. REC. ELECTRIC/ CYCLE 1 $57,265.90 $0.00 60 142.120 ACCTS. REC. ELECTRIC/ CYCLE 2 61 142.130 ACCTS. REC. ELECTRIC/ CYCLE 3

$133,078.35 $0.00 $4 13,739.34 $0.00 ~ -

62 142.1 40 63 142.150 64 142.155 65 142.1 60

ACCTS. REC. ELECTRIC/ CYCLE 4 $631,572.58 $0.00 ACCTS REC ELECT/DISCONNECTS CYCLE 5 $61,154.62 $0.00 ACCTS REC ELECTRWCYCLE V $0.00 $0.00 ACCTS REC - SHELWULCANNVALKER $1 49.81 6.1 4 $0.00

66 67 68

J

142.1 70 ACCTS REC - ELECT / CREDIT REFUNDS - $307.96 $0.00 142.175 A/R ELECTRIC - DUE FROM AGENCIES $27,541.92 $0.00 142.180 ACCTS REC ELECTRIC/CYCLE 8 $0.00 $0.00

ACCTS REC ELECTRWCYCLE 9 CUSTOMER ACCOUNTS RECEIVABLE-OTHER $0.00

-q---- $827,925.03 $0.00 $0.00 - --

$1 00,378.67 71 143.000 OTHER ACCOUNTS RECEIVABLE 72 143.098 VULCANACCRUEDEXPENSES $0.00 73 143.200 OTHER ACCTS REC - EMPLOYEE LTD $0.00 74 143.210 AIR OTHER-CHILD SUPPORT/GARNISHMENT $0.00 75 143.220 AIR OTHER-TOOL PURCHASE $1,733.21 76 143.230 A/R OTHER-COMPUTER PURCHASE $1 9,732.69 77 143.240 AIR OTHER -AUTO PURCHASE $0.00 78 143.250 A/R OTHER-CHARITABLE CONTRIBUTIONS $0.00 79 143.260 A/R OTHER-EMP PAID LIFE INSURANCE $0.00

$0.00 80 143.300 OTHER ACC REC/EMPLOYEES & DIRECTORS -~ - 81 143.305 OTHER A/R - EMPLOYEEE MlSC $750.00

82 143.3 10 ACCTS. RECEIVABLE-BIG RIVERS $23,747.97 83 143.315 A/R - BIG RIVERS INCENTIVE PROGRAM $1,260.00 84 143.320 A/R - WINTER STORM ASSISTANCE $17,647.72 85 143.321 A/R STORM ASSISTANCE - KENTUCKY $0.00 36 143.410 OTHER ACCOUNTS REC/EMP 401K PRETAX $0.00

$0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00

$2,608.92 $2,002.01

$947.95 $0.00 $0.00 $0.00 $0.00 $0.00

$4,627.06

. ~ I _ _ _ _

-_I-

___---


I Jackson Purchase Energy Corporation -- Case No. 2007-001 16

General Ledger Trial Balance December 31,2006

_ I ~

7 I _____p_

Account Present Balance Present Balance Number Description Debit Credit

130 131

I Case No. 2007-001 16

General Ledaer Trial Balance


224.400 RUS/NOTES-EXECUTED/CONSTRUCTlON $0.00 $0.00 224.600 ADVANCE PAYMENTS UNAPPLIED -LTD RUS $4,929,856.28 $0.00

I I December 31.2006 I

134 228.310

CONTRA ACCOUNT-PENSION & BENEFITS $0.00 $1 00,645.26 ACCUM PROVISION-PENSION & BENFITS $0.00 $861 I 127.34 '. ACCUMULATED PAST SERVICE LIABILITY $0.00 $0.00 ,

135 231 .OOO 136 231 .IO0 137 231.200 138 232.100 139 232.1 10 140 232.400 141 235.000 142 235.001 143 235.110 144 235.200 145 236.100 ' 146 236.200 147 236.300 148 236.400 149 236.500 150 237.000 151 237.100

237.105 152 153 237.200 154 237.300 155 237.400 156 237.600 157 241 .OOO 158 241.100 159 241.200 160 241.210 161 241.220 1 62 241.230 163 241.240 164 241.250 165 241.260 166 241.270 167 241.300 168 241.310 169 24 1 .320 170 241.330 ' 171 241.340 172 241 -350

-I____-

~

NOTES PAYABLE-COBANK SEASONAL LOANS $0.00 $0.00 SHORT TERM LOANS - CFC $0.00 $0.00 NOTES PAYABLE - GMAC FINANCING $0.00 $0.00 ACCOUNTS PAYABLE - GENERAL $0.00 $2,966,010.01 ACCOUNTS PAYABLE-PLANT CLEARING $0.00 $174,548.97

CUSTOMER DEPOSITS $0.00 $1,249,212.00 ATHLETIC FIELD FEES $0.00 $1,590.00 JPEC - GIFT CERTIFICATES $0.00 - $245.00 FUNDS RECEIVABLE UNIDENTIFIED $0.00 $0.00 ACCRUED PROPERTY TAXES $0.00 $77,460.00 ACCRUED TAXES/U S SOC SEC - UNEMPL $0.00 $155.69 ACCRUED TAXES - F.I.C.A. $0.00 $0.00

$0.00 $171.23 ACCRUED TAXES - STATE UNEMPLOYMENT ACCRUED TAXES - KY SALES & USE $0.00 $25,798.1 8 ACCRUED INTEREST/CUSTOMER DEPOSITS $0.00 $43,464.35 ACCRUED INTEREST - RUS/LTD $0.00 $4,052.61 ACCRUED INT RUS/LTD FFB LOAN - $0.00 $205,008.72 ACCRUED INTEREST-CFC/LTD $0.00 $3,747.61 OTHER ACCRUED INTEREST $0.00 $0.00 ACCRUED INT-PAST SERVICE LIABILI'PI $0.00 $0.00

INCOME TAX WITHHELD - FEDERAL $0.00 $0.00

ACCOUNTS PAYABLE - AUDITORS $0.00 $0.00

--

----

ACCRUED INTEREST- COBANK LTD $0.00 $31,772.75

ACCRUED TAXES-EMPLOYEES STATE W/H $0.00 $1 1,889.31 ACCRUED TAXES- CITY PAYROLL TAX $0.00 $10,850.52 MARSHALL CO. OCCUPATIONAL LIC. TAX $0.00 $804.43 MARSHALL CO. OCC. LIC. TAX-SCHOOLS $0.00 $1 57.57 MCCRACKEN CO. OCCUPATIONAL TAX $0.00 $2,667.73 BALLARD CO. OCCUPATIONAL TAX $0.00 $745.1 1 GRAVES CO. OCCUPATIONAL TAX $0.00 $402.95 LIVINGSTON C0.-OCCUPATIONAL TAX - - ~ - . $0.00 $1,366.41 CALVERT CITY-OCCUPATIONAL TAX $0.00 $81.43 ACCRUED TAXES- BALIARD CO. SCHOOL $0.00 $8,104.81 ACCRUED TAXES- CARLISLE CO. SCHOOL $0.00 $1,313.74 ACCRUED TAXES- GRAVES CO. SCHOOL $0.00 $6,345.1 7 ACCRUED TAXES-LIVINGSTON CO. SCHOOL $0.00 -- $1 7,980.1 3 ACCRUED TAXES-MCCRACKEN CO. SCHOOL $0.00 $47,946.67 ACCRUED TAXES- MARSHALL CO. SCHOOL $0.00 $14,588.59


- - Account

Number Present Balance Present Balance

Description Debit Credit

General Ledger Trial Balance December 31.2006

1 73 242.100 ACCRUED RENTALS $0.00 $0.00 - 174 242.200 ACCRUED PAYROLL $0.00 $83,617.66

175 242.300 ACCRUED COMPENSATED ABSENCES $0.00 $1 14,455.13 1 76 242.400 ACCRUED INSURANCE $0.00 $27,858.93 177 242.500 ACCRUED AUDITORS EXPENSE $0.00 $1 4,000.00 178 252.000 CUSTOMER ADVANCES FOR CONSTRUCTION $0.00 I_ $1 49,870.07 179 ._ 253.000 OTHERDEFERREDCREDITS $0.00 $13,999.51

181

183 - 182

253.100 OTHER DEFFERED CR - URD ADVANCE PMT I $0.00 $29,664.73

362.000 DIST. PLT. - STATION EQUIPMENT $12.008.367.10 $0.00 360.000 DIST. PLT. - LAND AND LAND RIGHTS $235,870.58 $0.00

184 185 186

. . , 364.000 DIST. PLT.- POLES, TOWERS, FIXTURES $28,486,552.14 $0.00

-~ 365.000 DIST. PLT. - O/H CONDUCT. & DEVICES $17,054,966.32 $0.00 366.000 DIST. PLT. - UNDERGROUND CONDUIT $4.106.734.85 $0.00

187 188

. - - -

"~ 367.000 DIST. PLT. - U/G CONDUCT. & DEVICES $914237466.54 $0.00 368.000 DIST. PLT. - LINE TRANSFORMERS $15.623.839.04 $0.00

1189 369.000 DIST. PLT. - SERVICES '7 90 370.000 DIST. PLT. - METERS 191 DIST PLT ~ INSTAL. ON CUST. PREMISE 192 372.000 DIST PLT - LSD. PROP. ON CUST. PREM

DIST PLT - ST. LIGHT. & SIGN. SYS.

37 1 .OOO

373.000

. . . $6,468,810.85 - $0.00 $2,934,243.34 $0.00 I $1,484,793.67 $0.00

$1,047.60 $0.00 $558.137.96 $0.00

194 389.000 195 390.000 196 391 .OOO 197 391.100 198 391.200 199 392.000 200 392.100 201 393.000 202 394.000 203 395.000 204 3 96.000 205 397.000 206 398.000

GEN PLT - LAND AND LAND RIGHTS $861866.25 $0.00 GEN PLT - STRUCTURES & IMPROVEMENTS __- $2,047,038.80 $0.00 GEN PLT - OFFICE FURNITURE 81 EQUIP $292,326.37 $0.00 GEN PLT - COMPUTER EQUIP/ SOFTWARE $322,289.72 $0.00 MAPPING DATA ACQUISITION $0.00 $0.00 GEN PLT - UTILITY TRANSP. EQUIP. $2,079,855.77 $0.00 GEN PLT - LIGHT DUTY TRANSP. EQUIP $375,929.61 $0.00 GEN PLT - STORES EQUIPMENT $79,007.66 $0.00 GEN PLT - TOOLS, SHOP, GARAGE EQUIP $451,976.20 $0.00 GEN PLT - LABORATORY EQUIPMENT $1 69,060.01 $0.00 GEN PLT - POWER OPERATED EQUIPMENT $287,695.14 $0.00 GEN PLT - COMMUNICATIONS EQUIPMENT $589,508.87 $0.00 GEN PLT - MISCELLANEOUS EQUIPMENT $94.241.76 $0.00

207 403.600 DEPR. EXP. - DISTRIBUTION PLANT $3,0191456.79 ' $0.00 208 403.700 DEPR. EXP. - GENERAL PLANT $215,643.01 $0.00 209 408.700 PUBLIC SERV. COMM.(PSC) ASSESSMENT $41,656.75 $0.00

21 1 41 6.000 COST & EXPENSES/POWER PLUS CR CARD - $0.00 $0.00

$0.00 21 3 417.100 EXPENSES OF NONUTlLlTi' OPERATIONS $0.00

21 0 41 5.000 REV/POWER PLUS CR CARD ROYALTIES $0.00 $2,201 -30

21 2 41 7.000 LONG DISTANCE COMMISSIONS $0.00 $3,833.41 _I-

I 214 21 5

417.110 CUSTOMER SERVICE COSTS-LONG DlST $72.25 $0.00 41 7.120 ADMIN & GENERAL COSTS- LONG DIST $0.00 $0.00


I Jackson Purchase Energy Corporation Case No. 2007-001 16

I I --’ December 31,2006

21 6 21 7 21 8 21 9 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245


418.100 EQUITY IN EARNINGS- SUB. COMPANIES $0.00 $0.00 41 9.000 INTEREST INCOME $0.00 $302,866.47 41 9.01 0 ERC INTEREST INCOME $0.00 $0.00 41 9.600 INTEREST INCOME - CUSHION OF CREDIT $0.00 $290,416.67 421 .OOO MISCELLEANOUS NON-OPERATING INCOME $0.00 $9,557.68 421.100 GAINS ON DISPOSITION OF PROPTY $0.00 $20,737.80

424.000 OTHER CAP. CRS. & PATR. CAP. ALLOC $0.00 $1 13,228.47 421.110 LOSS ON DISPOSITION OF PROPERTY $50,830.43 $0.00

426.1 00 MSC INCOME DEDUCTIONS - DONATIONS $1,424.07 $0.00 426.300 PENALTIES $0.00 $0.00 427.100 INTEREST ON LONG TERM DEBT - RUS $1,439,999.39 $0.00 427.105 INT. ON LONG TERM DEBT - RUS/FFB $788,880.04 $0.00 427.500 INTEREST ON LONG-TERM DEBT - CFC $46,267.88 $0.00 427.600 INT. ON LTD - COBANK $385,369.99 $0.00 43 1.000 INTEREST EXP-SHORT TERM- COBANK $0.00 $0.00 431.010 INTEREST EXPENSUSHORT TERM - CFC $0.00 $0.00 431.020 INTEREST ON SHORT TERM NOTE - GMAC $0.00 $0.00 431 .lo0 INTEREST EXPENSUCUSTOMER DEPOSITS $66,910.72 $0.00 431.200 INTEREST EXP-PAST SERVICE LIABILITY $0.00 $0.00 440.1 00 RESIDENTIAL SALES $0.00 $23,404,071.05 441 .OOO IRRIGATION SALES $0.00 $6,452.64 442.100 SMALL COMMERCIAL (UNDER 1000 KVA) $0.00 $9,461,559.1 5 442.200 LARGE COMMERCIAL (OVER 1000 KVA) $0.00 $2,102,275.1 2 442.21 0 INDUSTRIAL - SHELL PIPELINE $0.00 $553,576.2 1 442.220 INDUSTRIAL-VULCAN MATERIALS $0.00 $415,242.00 444.000 PUBLIC STREET & HlGHmY LIGHTING $0.00 $70,275.40 445.000 OTHER SALES TO PUBLIC AUTHORITIES $0.00 $443,917.30 450.000 PENALTIES (ACCT. REC. - ELECTRIC) $0.00 $293,628.1 1

$1 18,075.00 451 .OOO MlSC SERVICE REV. - RECONNECT FEE $0.00 451.100 MlSC SERVICE REVENUE-COLLECTIONS $0.00 $28.030.00

246 247 248 249 250 251 252 253 254 255 256

. . 451.200 MlSC SERVICE REVENUE-DISCONNECTS $0.00 $0.00 451.210 MISC SERV REV - AFTER HR CONNECTION $0.00 $17,770.00 451.300 MISC SERVICE REVENUE-RET CHECKS $0.00 $13,005.00

451 500 MlSC SERV REV - AMR INSTALLATION $0.00 $0.00 451.600 MlSC SERV REV - AMR MONTHLY CHARGE $0.00 $660.00 454.000 RENT FROM ELECTRIC PROPERTY $0.00 $460,159.33 456.000 OTHER ELECTRIC REVENUES $0.00 $7,677.08 456.100 OTHER ELECTRIC REVENUES-LEASE - - $0.00 $0.00 555.000 PURCHASED POWER $23,652,045.64 $0.00 555.100 PURCHASED POWER (COOP USAGE) $3.898.22 $0.00

451 -400 MlSC SERV REV- LATE PYMT-ERC LOANS $0.00 $0.00

2571 580.000 258 I 581 .OOO

. -~

OPERATION SUPERVISION & ENGINEERING $1 941275.99 $0.00 LOAD DISPATCHING EXPENSE $1 7,333.00 $0.00


259 260 26 1 262 263 264 265 266 267 268 269 270 271 272

I Jackson Purchase Energy Corporation Case No. 2007-001 16

Number Description Debit Credit

582.000 - STATION EXPENSES $1 5,609.31 $0.00 583.000 OVERHEAD LINE EXPENSES $201,101 5 7 $0.00 583.100 O/H L=XP.-PCB TEST & INSPECTION $2,935.73 $0.00 583.200 OVERHEAD LINE EXPENSE-LINE PATROL $22,629.66 $0.00 583.300 ~- O/H LINE EXP-OIL SP CLEANUP/100 REG $4,950.27 $0.00 584.000 UNDERGROUND LINE EXPENSES $52,296.95 $0.00 584.200 UNDERGROUND LINE EXPENS-LINE PATROL $0.00 $0.00 585.000 STREET LIGHTING EXPENSES $0.00 $0.00 586.000 METER EXPENSES $98,010.72 $0.00 586.100 METER EXP. - ROUTINE CONN. & DISCON $266,607.56 $0.00 586.200 METER RECORDS - PREP. & MAINT. $1,398.51 $0.00 587.000 CUSTOMER INSTALLATION EXPENSES $3,568.52 $0.00 588.000 MlSC DlST EXPENSES-LABOR & O/H $283,477.24 $0.00 588.1 00 MlSC DlST EXP-OFFICE SUPPLIES/EXP $21,562.30 $0.00


273 588.200 OTHER MISCELLANEOUS DlSTRlBUT EXP 274 588.300 MISC. DISTRIBUTION - MAPPING COSTS 275 590.000 MAINTENANCE SUPERVISION & ENGINEER 276 592.000 MAINTENANCE OF STATION EQUIPMENT 277 593.000 MAINTENANCE OF OVERHEAD LINES 278 593.1 00 MAINT OF OVERHEAD LINES - STORMS 279 593.200 MAINTENANCE - SECURITY LIGHTS 280 593.300 MAINT OF O/H LINES - TREE TRIMMING

282 593.500 MAINT OF OVERHEAD LINES-LINE PATROL 283 594.000 MAINTENANCE OF UNDERGROUND LINES 284 595.000 MAINTENANCE OF LINE TRANSFORMERS

286 597.000 MAINTENANCE OF METERS 287 598.000 MAINT. OF MSC. DISTRIBUTION PLANT 288 598.100 MAINT OF MSC DlST PLANT-TELE.LINES 289 901 .ooo SUPERVISION OF CUSTOMER ACCOUNTS 290 902.000 METER READING EXPENSES 291 902.100 METER READING EXPENSES-SYSTEM 292 903.000 CUSTOMER RECORDS & COLLECTION EXP. 293 903.100 CUSTOMER RCDS.& C0LL.-OVER & SHORT 294 903.200 CUST.RCDS & COLL. - COMPLAINTS, ADJ 295 903.300 CUST RCDS & COLL - CONNECTS & DISC 296 903.400 CUST RCDS & COLL - DELINQUENT ACCTS 297 903.41 0 DELINQUENT ACCTS OVER 30 DAYS 298 903.500 CUST RECORDS - DOCUMENT SCANNING

281 593.305 _. MAINT OF O/H LNS - TREE TRIM -STORM

285 596.000 MA~NTENANCE OF STREET LIGHTING

299 - 903.600 CREDIT CARD DISCOUNT/HANDLING EXPEN __ 300 904.000 UNCOLLECTIBLE ACCOUNTS EXPENSES 301 904.100 UNCOLLECTIBLE ACC EXP-CREDIT BUREAU

I I Account

$293,248.06 $0.00 $282,771.88 $0.00 $83,346.77 $0.00

$128,520.41 $0.00 $1,560,117.09 $0.00

$20,711.64 $0.00 $1,704.1 6 $0.00 -

$1,242,624.67 $0.00 $0.00 $0.00 $0.00 $0.00

$1 18,934.67 $0.00 $47,061.26 $0.00 $25,759.1 1 $0.00 $1 0,820.32 - $0.00

$1 55,752.58 $0.00 $I 8,586.34 $0.00 $13,046.94 $0.00

$0.00 $346,099.44 $0.00 $274,431.93 $0.00

$79,140.14 $0.00 $97,397.10 $0.00

$0.00 $1 18.50 $0.00

$31,449.99 $0.00 $48,721 -51 $0.00 $53,645.40 $0.00 $5,795.65 $0.00

- -- --- $75,685.01

$0.00 $327.67

I-

$63,477.85

I

I Jackson Purchase Energy Corporation

Case No. 2007-001 16 General Ledger Trial Balance

December 31.2006

Account Number

Present Balance Present Balance Description Debit Credit

302 303 304 305 306 307

309 310 31 1 312 31 3 314 31 5 31 6 31 7 31 8 31 9 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334

336 337 338 339 340 341 342 343

_I_ 308

-- 335

907.000 CUSTOMER SERVICE - SUPERVISION $72,583.14 $0.00 908.000 CUSTOMER ASSISTANCE EXPENSES $1,461.89 $0.00 908.510 CUSTOMER ASSISTANCE EXPENSE-FOOD $0.00 $0.00 908.560 CUSTOMER ASSISTANCE EXPENSE-PRIZES $0.00 $0.00 908.640 AD EXP/PRINTING-APPLICATIONS $0.00 $0.00 909.000 INFORM. & INSTRUCT. A D V E R T ~ G EXP $0.00 $0.00 909.400 MEDIA AD EXP-MISCELLANEOUS $1 15.67 $0.00 909.41 0 ADVERTISING EXPENSE-NEWSPAPER $0.00 $0.00 909.420 MEDIA AD EXPENSE-RADIO $0.00 $0.00 909.430 MEDIA AD EXP-TV $0.00 $0.00 909.440 ADVERTISING EXPENSE-PERIODICALS $0.00 $0.00 909.450 ADVERTISING EXPENSE-DIRECTORY $0.00 $0.00 909.600 ADVERTISING EXPENSE-MISCELLANEOUS $0.00 $0.00 909.61 0 MEDIA AD EXP-PRINTING-BROCHURES $0.00 $0.00 909.620 ADVERTISING EXPENSE-EMPLOYEE NEWLTR $0.00 $0.00 909.640 ADVERTISING EXPENSE-APPLICATIONS $0.00 $0.00 970.000 MSC CUSTOMER SVC & INFORMATION EXP $1 01,849.09 $0.00 91 1 .ooo CUSTOMER SERVICE-SUPERVISOR SALES $0.00 $0.00 912.000 DEMONSTRATING & SELLING EXPENSES $0.00 $298.45 912.100 ELECTRIC HOME INCENTIVE $995.00 $0.00 912.200 ADD ON REPLACEMENT INCENTIVE $2,445.00 $0.00 91 2.300 WATER HEATER INCENTIVE $900.00 $0.00 91 2.400- DUAL FUEL INCENTIVE $0.00 - $0.00 912.560 DEMO & SELLING EXPENSE-PRIZES $0.00 $0.00

$0.00 91 2.600 DEMO & SELLING EXP-PRINTING/MISC $0.00 91 3.000 ADVERT1 S ING EXPENSES $23,271 .E $0.00 91 3.400 SALES & PROMO EXP-MISCELLANEOUS $0.00 $22,691.52 91 3.41 0 SALES & PROMO MEDIA EXP-NEWSPAPER $21,266.05 $0.00 91 3.420 SALES & PROMO EXP-NEWSPAPER $23,696.31 $0.00 91 3.430 SALES & PROMO EXP-TV $31,444.75 $0.00 91 3.440 SALES & PROMO EXP-PERIODICALS $0.00 $0.00 91 3.450 SALES & PROMO EXP - BS. DIRECTORY $4,324.00 $0.00 91 3.600 SALES & PROMO EXP-PRlNT/MISC $633.00 $0.00 91 3.620 SALES & PROMO EXP-PRINT/EMP NEWLETT $1 5,671.28 $0.00 920.000 ADMINISTRATIVE & GENERAL SALARIES $731,413.59 $0.00 920.010 ADMlN & GEN. -JOINT USE SALARIES $3,686.76 $0.00 920.015 ADMIN & GEN - FEMA COSTS $0.00 $0.00 920.020 ADMINS. & GENERAL EXPENSES - SAFETY $0.00 $0.00 920.1 00 ADMIN. & GEN. SALARIES - MANAGER $1 95,979.53 $0.00 921 .OOO OFFICE SUPPLIES AND EXPENSES $343,402.92 $0.00 921.100 OFFICE SUPPLIES & EXP. - MANAGER $50,865.91 $0.00 923.000 OUTSIDE SERVICES EMPLOYED $35.578.36 $0.00

-~


Account Number


___I_._

7 Present Balance

Descriotlon Debit

346 925.000 347 926.000 348 926.1 00 349 926.200 350 928.000 351 930.100 352 930.200 353 930.201 354 930.202 355 930.203

1 - - INJURIES AND DAMAGES $43,480.12 $0.00 EMPLOYEE PENSIONS & BENEFITS-HOSP $326.66 $0.00 EMPLOYEE UNIFORM EXPENSES $24,341.95 $0.00 OTHERFMTLOYEE PENSIONS BENEFIT $86,225.02 $0.00 REGULATORY COMMISSION EXPENSES $21,649.58 $0.00 GENERAL ADVERTISING EXPENSES _I $0.00 $0.00 ~

MISCELLANEOUS GENERAL EXPENSES $1 37,443.65 $0.00 ECONOMIC DEVELOPMENT-MISCELLANEOUS - $0.00 $0 IO0 ECONOMIC DEVELOPMENT-BALLARD $0.00 $0.00 ECONOMIC DEVELOPMENT-GRAVES $0.00 $0.00

356 357 358

930.204 ECONOMIC DEVELOPMENT-LIVINGSTON $0.00 $0.00 930.205 ECONOMIC DEVELOPMENT-MARSHALL $0.00 $0.00 930.206 ECONOMIC DEVELOPMENT-MCCRACKEN $0.00 $0.00

359 360 36 1

930.21 0 DIRECTOR'S FEES AND EXPENSES $57,815.81 $0.00 930.21 8 GEN. EXP. J. MCDOUGAL CASE $0.00 $0.00 930.21 9 SPECIAL BALLOT MAILING $0.00 $0.00

I 377 I I I 1 I

374 999.999 375 376

. . RAIN DELAY $0.00 $0.00

379 I Accounts 400.000 To 999.999 (1 07,539.67) I

Exhibit 0

Independent Auditor’s Report

Exhibit 0 Page 1 of 14

Kentucky 20 Jackson Purchase Energy

Paducah, Kentucky Report on Audit of Financial Statements for the year ended December 31,2006


Independent Auditors' Report

Report on Compliance and Internal Control Over Financial Reporting

Financial Statements

Balance Sheets

Statements of Revenue and Patronage Capital

Statements of Cash Flows

Notes to Financial Statements

1

2

3

4

5

6 - 12

Exhibit 0 Page 3 af 14

ALAN M. Z m m m CERTIFIED PUBLIC A C C O U N T . .

MEMBER 1032 CHEn;T)RD DRIVE LEMNGTON, KENIVCKY 40509 (859) 264-7147

AMERICAN INSTlTUTE OF CPA S INDIANASOCIEIY OFCPA'S KENTUCKY S0CEET"y OF CPA'S AICPA DIVISION FOR FIRMS TENNESSEE STATE BOARD OF ACCOUNTANCY

independent Auditar's Repor(

To the Board of Directors Jackson Purchase Energy Corporation

I have audiled the balance sheet of Jackson Purchase Energy Corporation, as of December 3 1, 2006, and the related statements income and patronage capital and cash flows For the year then ended These financial statements are the responsibility of Jackson Purchase's management My responsibility 1s to express an opinion on these financial statements based on my audit The financial statements of Jackson Purchase as of December 3 1 , 2005, were audited by other auditors whose report dated February 2,2006, expressed an unqualified opinion on those statements

I conducted my audit in accordance wth audihng standards generaily accepted in the United States of America, the standards applicable to financial audits contained in Government Audttrng Standards issued by the Comptroller General of the United States and 7 CFR Part 1773, Policy on Audits of Rural Utilities Service (RUS) Borrowers Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements An audit also includes assessing the accounting principles used and significant estimates made by management, as weil as evaluating the overall financial statement presentation I believe that my audit provides a reasonable basis for my opinion

In my opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Jackson Purchase as of December 31,2006, and the results of operations and cash flows for the year then ended, in conformitv with accounting principles generally accepted in the Umted States of America

In accordance with Government Auditing Standards, I have also issued a report dated February I , 2007, on my consideration of Jackson Purchase's internal control over financial reporting and my tests of i ts compliance with certain provisions of lams, regulations, contracts and grant agreements and other matters The purpose of that report 1s to describe the scope of my testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance That reporl is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of my audlt

Alan M Zumslein rebrunry 1,2007


ALAN M. Z w m m CERTJFIED PUBLIC ACCOUNTX"

1032 CHIEXFORD DRIVE LEXINGTON. KENTUCKY 40509 (859) 264-7147

To the Board of Directors Jackson Purchase Energy Corporation

MEMBER AMERICAN INSTITCJTE OF CPA'S

9 INDJANA SOCIETY OFCPfl'S KENTUCKY S O C E T Y OF CPA'S AlCPA DIVISION FOR FIRMS

* TEMJESSEE STATE BOARD OF ACCOUNTANCY

I have audited the financial statements of jackson Purchase Energy Corporation as of and for the year ended December 3 1,2006, and have issued my report thereon dated February I , 2007 I conducted my audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained tn Government Auditing Standards, issued by the Comptroller General of the United Slates - As part of obtaining reasonable assurance about whether Jackson Purchase's financial statements are free of matenal misstatement, 1 performed tests of Its compliance wth certain provisions of laws, regulations, contracts and grants, noncompliance w t h which could have a direct and material effect on the determination of financIa1 statement amounts However, providing an opinion on compliance wth those provisions was not an objective of my audit and, accordingly, I do not express such an opinion The results of my tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards

Internal Contro 1 Over Financial Rep orting

In planning and performing my audit, I considered Jackson Purchase's internal control over financial reporting in order to determine my auditing procedures for the purpose of expressing my opinion on the financial statements and not to provide an opmon on the internal control over financial reporting My consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses A material weakness is a condition in which the design or operatlon of one or more of the internal control components does not reduce to a relatively low level the nsk that misstatements caused by error or fraud in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned fiinctions I noted no matters involving the internal control over financial reporting and its operation that I consider to be material weaknesses

This report is intended solely for the Informalion and use ofthe audit committee, management, the Rural Util~ties Service and supplemental lenders, and IS not intended to be and should not be used by anyone othcr than those specified parlies

Alan M Zumstein February 1,2007

Exhibit 0 Page 5 of 14 Jackson Purchase Energy

Balance Sheets, December 3 1,2006 and 2005

Assets

Electrrc Plant, at original cost l[n service Under construction

$105,262,626 3,204,054

108,466,680 --- 3 1,7 14,276 A- 76 752 404

$98,969,450

10 1,827,930 2,85 8,4 80-

Less accumulated depreciation 29,579,797 72,248, i33

2.001 -35 1 Investments In Associated Organizations 2,037,879 -

Current Assets Cash and cash equivalents Accounts receivable, less allowance for

Accrued unbilled revenue Material and supplies, at average cost Other current assets

2006 of$I57,214 and 2005 of$147,4485

3,665,763 988,618

2,122,726 2,064,940 2,19 1,946 497.023

2,301 ,o 10 1,668,277 1,183,096 466.2 I 1

9,284,3 57 1,291,215 -

- 7,865,253 1.489.863 Deferred charges

Total $89,365,855 __ $83,604,600

Memb ers' Eaurti es and L i a b i h

Members' Equities Memberships Patronage capital

$208,695 $22 5,62 5 34,343,254 34,235,7 I4

34,444,409 34,568,879 ---

LongTerm Debt 46,7 I8 372 4 1 726,9l L

Accumulated Postretlrement Benefits 861, I27 781,235 "I___

Current Liab i l i ties Current portion of long term debt Accounts payable Consumer deposits Accrued expenses

2,000,000 I ,8 15,545 3,140,559 2,854,620 I ,25 1,047 987,37 1 756,807 713,464

6,37 1,000 7,148,4 13 --- -I_

Consumer Advances for Constructron 193,534 .- -. 156,569 -

Total $89,365,855

Tht dccornpanying notes are an integral part of the finriiicial statements

3

Statements of Revenue and Patronage Capital

for the years ended December 3 1,2006 and 2005

$37 396 373 Operating Revenues dL

Operating Expenses Cost of power 23,65 5,944 Distribution - operations 1,761,777 Disrribution - maintenance 3,413,939 Consumer accounts 1,088,682 Consumer service and information 277,667 Administrative and general 1,992,235 Depreciation, excluding $325,332 in 2006 and

3,235,100 Taxes 4 f ,657 Other deductions 1- 15,995

3 5,4 82,996

$395,452 In 2005 charged to clearing accounts

Operating Margins before Interest Charges 1,9 13,377

Interest Charges Long-term debt Other interest

2,660,5 17 __ 66,91 I - 2,727,428

Operating Margins after Interest Charges - (8 14,05 1)

Patronage Capital from Associated Organizations --- 1 13,228

Nonoperating Margins, principally interest 593,283

Net Margins ( I 07,540)

Patronage Capital - beginning of year - 34,343,254

Palronage Capital - end of year $34,235,7 14


BE

d $37 928,066

23,854,26 I I ,358,6 19 3,003,6 16 1,114,604

284,078 1,786,632

3,13 1,797 40,996

-- 20,236 34,594,839

3,333,227

2,211,585 75,330

2,286,9 15

1,046,3 I2

- _1

I-- 107,996

__._ 433,143

1,587,45 1

-- 32,755,803

$34,343,254

The accompanying noks arc an integral part of the financial statcments

4

Statements of Cash Flows for the years ended December 3 1,2006 and 2005

Cash Flaws fiom Operating Activities Net margins Adjustments to reconcile to net cash provided

by operating activities Deprec ia t i on

Charged to expense Charged to clearing

Capital credits allocated Accumulated postretirement benefits Net change in current assets and liabilities

Receivables Matenal and supplies Other current assets Deferred charges Accounts payable Consumer deposits Accrued expenses Consumer advances for construction

Cash Flows from Investing Activities i Construction of plant

Salvage recovered from plant Receipts from Investments, net

Net Cash Flows from Financing Activities Net decrease in memberships Additional long-term borrowings Advance payments Payments on long-term debt

Ne1 increase in cdsh balances

Cash and cash equivalents - beginning

Cash and cash equivalents - ending

Supplemenral dixlosures of cash flow information Interest on long-term debt

m ($1 07,540)

3,235, IO0 325,332

( I 13,228) 79,892

2 18,379 1,008,850

30,8 12 198,648 285,939 263,676 43,343 36,965 -

5,506,168

(8, i 23,6 14) 58,91 I 76,700

____I_

(7,988,003)

(1 6,930) 5,922,000 1 , 170,594

(1,9 16,684) - 5,158,980

2,677,145

988,618

$3,665,763

$2,484,607


2M5

$1,587,45 I

3, I3 1,797 3 95,452

(I 07,996) 42, I26

( I4 I , 142) (1,144,496)

(703 6 8) (43 9,262) 103,411 56,229

236,26 I 29.656

3,678,619

(7,904,152) 14,384 79,489

(7,810,279)

(20,545) 5,500,000

89,843 ( 1,56 I ,9 1 2) 4,007 386

(124,274)

1,112,892

$988 61 8

- ._.-

I -

$2,139,04 I

’I he accompanying notes are an inlegral part of the financial sratemenls

5

Notes to Financial Statements Exhibit 0

Page 8 of 14

--

f Summary of Significant Accounting Policies

Jackson Purchase maintains ~ts records in accordance wth policies prescribed or permitted by the Kentucky Public Service Commission (PSC) and the United States Department of Agnculture, Rural Utilities Service (RIJS), which conform in all material respects wth generally accepted accounting pnnciples The more significant of these policies are as follows

Electric Plant

Electric plant IS stated at original cost, less contributions, which IS the cost when first dedicated to public service Such cost includes applicable supervisory and overhead costs There was no interest required to be capitalized on construchon for the year

The cost of rnamtenance and repairs, including renewals of minor items of property, IS charged to operating expense The cost of replacement of depreciable property units, as distinguished fiom minor items, is charged to electric plant The cost of units ofproperty replaced or retired, including cost of removal net of any salvage value, is charged to accumulated depreciation

Electric plant consisted of m m

Distribution plant $98,386,830 $92,371,766 General plant 6,875,796 6,597,684 -I

Total $105,262,626 $98,969,450

Depreciation

Provision has been made for depreciation on the basis of the estimated lives of assets, using the straight-line method Depreciation rates range from 1 44% lo IO 0%, with a composite rate of 3 07% for distribution plant General. plant depreciatlon rates are as follows

Structures and improvements Transportation equipment Other general plant

2 5% 10% - 20%

5% - 20%

Estimates

The preparatlon of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statemcnh and the reported amounts of revenues and expenses during the reporting period Actual result.; could differ from those eqtimates used in the preparatlon of the financial statements

Continued

6

Notes to Financial Statements, continued Exhibit 0

Page 9 of 14

1 Summary of Significant Accounting PoI~cies, continued

Revenue

Jackson Purchase records revenue as billed to its consumers based on monthly meter- reading cycles All consumers are required to pay a refundable deposit, however, i t may be waived under certain circumstances Jackson Purchase's sates are concentrated in a six county area of western Kentucky There were no consumers whose indivrduai account balance exceeded 10% of outstanding accounts receivable at December 3 I , 2006 or 2005 Consumers must pay their bill within 20 days of billing, then are Subject to disconnect after another IO days Accounts are written off when they are deemed to be uncollectible The allowance for uncollectible accounts is based on the aging of receivables

Cost of Power

lackson Purchase IS one of three (3) members of Big Rivers Electric Corporation, lnc (Big Rivers) lJnder a wholesale power agreement, Jackson Purchase is committed to purchase its electric power and energy requirements from Big Rivers until 2023 The rates charged by Big Rivers are subject to approval of the PSC The cost of purchased power is recorded monthly during the period in which the energy is consumed, based upon billings from Big Rivers

Fair Value of Financral Instruments

Financial instruments include cash, temporary cash investments and long-term debt Investments in associated organizations are not considered a financial instrument because they represent nontransferable interest in associated organizations

The carrying value of cash and temporary cash investments approximates fair value because of the short maturity of those instruments The fair value of long term debt approximates the fair value because of the borrowing policies of Jackson Purchase

Jackson Purchase may, and also does, invest idle funds in NRUCFC commercial paper Investments in commercial paper are classified as held-to-maturity in accordance with Statement of Financial Accounting Standards (SFAS) No 1 15 Held-to-maturity securities are presented at amortized cosl the fair value of held-to-maturity securities approximates cost at 2006 and 2005

Income Tax Status

Jackson Purchase is excmpt from federal and state income taxes under provisions of Section 50 1 (c)( 12) Accordingly, the financial statements include no provision for income taxes

Statement of Cash Flows

For purposes of the statement of cash flows, Jackson Purchase considers temporary investments having a maturity of three months or less to be cash equivalents

Continued

7

Notes to Fm.ncial Statements, continued Exhibit 0

Page 10 of 14

__.-

2 Investments u1 Associated Organuations

Jackson Purchase records patronage capital assigned by associated organizations in the year in which such assignments are received

The Capital Term Certificates (CTCs) of National Rural Utilities Cooperative Finance Corporation (NRUCFC) are recorded at cost The CTCs were purchased fiom NRUCFC as a condition of obtaining long-term financing The CTCs bear interest at 3% and 5% and are scheduled to mature at varying times fiom 2020 to 2080

Investments in associated organizations consisted of 2..Q!Xi ana

NRUCFC CTC's $946,546 $947,373 NRUCFC Patronage capital assigned 40,537 4 1,636 CoBank, ACB 623,844 61 3,3 13 Others ___ 426,952 3 99,02 9

Total $2,037,879 $2,001,351

3 Patronage Capital

Under provisions of the long-term debt agreement, return to patrons of capital contnbuted by them is limited to amounts which would not allow the total equities and margins to be less than 30% of total assets, except that distributions may be made to estates of deceased patrons The debt agreement provides, however, that should such dlstributions to estates not exceed 25% of net margins for the next preceding year, Jackson Purchase may distribute the difference between 25% and the payments made to such estates The equity at December 3 1,2006 was 39% of total assets

Patronage capital consisted of 241)4 290$

Assigned to date $34,343,254 $32,755,802 1,587,452 - (1 07,540) Assignable -

Total $34,235,714 $34,343,254

4 Long Term Debt

All assets, except vehicles, are pledged as collateral on the long-term debt to RUS, Federal Financing Bank (FFB), CoBank, ACB and NRUCFC under njoint mortgage agreement The long term debt is due in quarterly and monthly installments of varying amounts through 2039 Jackson Purchase hae loan funds available from RUS in the amount of $2,833,000 RUS assess 12 5 basis pornts IO administer the FFB loans

Continued

8

Notes to Financial Statements, continued --

4 Lolog Tern Debt, continued

Long Term debt consisted of

Ftrst mortgage notes due RUS 2% to 5 53% Advance payment

First mortgage notes due FFB 4 101% to 5 158%

First mortgage notes due CoBank, ACB 4 78% 10 6 62%

First mortgage notes due NRUCFC 5 50%

Less current portion

Long tern porhon

$28,791,529 (4,929,856) 23 $6 1,673

17,720,424 -

6,299,598

836,677 - -

48,7 18,372 - L J 2 000 000

$46,7 18,372

Exhibit 0 Page 1 1 of 14

$29,546,188 (6,100,450) 23.445.738

12.304.721

6,911,143 -

880.860

43,542,462 1,8 15,545

$41,726,917

As of December 3 1,2006, the annual current portion of long term debt outstanding for the next five years are as follows 2007 - $2,000,000, 2008 - $2,100,000, 2009 - $2,000,000, 20 10 - $2,100,000,20 1 1 - $2,100,000

5 Short Term Borrowlngs

At December 3 1,2006, Jackson Purchase had a short-term line of credit of $5,000,000 available from NRUCFC There were no borrowings against this line of credit during the audit period

6 Pension Plans

All eligible employees of Jackson Purchase particlpate in the NRECA Retirement and Security Program, a defined benefit pension plan qualified under section 401 and tax-exempt under section 501 (a) of the Internal Revenue Code Eligible employees include employees hired prior IO January 1,2006 Non-eligible employees are those hired after January 1,2006 Jackson Purchase makes annual contributions to the Program equal to the amounts accrued for pension expense Contributlons to this plan were $543,867 for 2006 and $502,758 for 2005 In this multlemployer plan, which IS available to all member cooperatives ofNRECA, the accumulated benefits and plan assets are not determined or allocated separately by individual employer

Continued

9


Page 12 of 14

6 Pension Plans, confinued

All eligible uruon employees participate in the International Brotherhood of Electrical Workers (IBEW) Savings Plan Eligible employees include employees hired prior to January 1 , 2006 Non-eligible employees are those hired aAer January 1,200G Jackson Purchase contnbutes 10% of base wages to the plan Jackson Purchase contnbutions to the plan totaled $157,275 in 2006 and $1 50,893 in 2005

7 Retirement Savings Plan

Eligible non-union employees are eligible to participale in the NRECA 40 1 (k) Plan Jackson Energy contnbutes 4% of annual wages to the plan, which totaled $84,365 for 2006 and $72,720 for 2005

Non-eligible employees, as defined above, participate in the savings plan, wth Jackson Purchase cantnbuting 14% for non-union employees and 10% for union employees

8 Postrebrement Benefits

Jackson Purchase sponsors a defined benefit plan that provides medical Insurance coverage to retirees The premiums are paid for a maximum of ten years or until age 65, whichever comes first Postretirement benefits are not funded The study had been updated to January 1,2006

For measurement purposes, a 8 5% annual rate of Increase, decreasing by 0 5% per year until S 5% per year, in the per capita cost of covered health care benefits was assumed The discount ratc used in determining the accumulated postretirement benefit obligation was 6 75% and discount rate on expense was 7 0%

The following is a reconciliation of the postretlrement benefit obligation

Postretirement Benefit Obligation Balance, beginnmg of period Recognition of components of net periodic postretirement benefit cost Service cost Interest cost Amortization of gams or losses

Benefits paid lo participants Nct change

Balance, end of period

$78 1,235 - $739,109

45,000 52,000 39,000 61,100 40,500 40,500

124,500 153,600 (24,290) ( 1 11,474) 100,210 42,126

.__

$88 1,445 $78 1,235

Continued

10


Page 13 of 14

8 Postretirement Benefits, continued

The b d e d status of the plan was as follows m m

Accumulated postretirement benefit obligation $635,000 $1,005,135 Plan assets at fair value - Funded status

.__-.- 63 5,000 1,005,135

Unrecognized net gain (losses) from (223,900) changes in assumptions (209,491) -I-

Accrued postretirement benefit cost $425.5 09 $78 1,235

9 Off Balance Sheet Risk

Jackson Purchase has off balance sheet risk in that they maintain cash deposits in financial institutions in excess of the amounts insured by the Federal Deposit Insurance Corporation (FDIC) At December 3 1,2006, the financial insltuhons reported deposits in excess of the $100,000 FDIC insured Irrnit on several of the accounts Deposits and repurchase agreements in excess of the FDIC llmits are 100% secured wth collateral fiom financial inst~tutions

9 Rrsk Management

Jackson Energy IS exposed to vanous forms of losses o f assets associated with, but not limited to, fire, personal IlabilJty, theft, vehicular accidents, errors and omissions, fiduciary responsibility, workers compensation, etc Each of these areas is covered through the purchase of commercial insurance

Jackson Purchase has adopted and implemented an Emergency Response Plan, that has been filed with RUS and the Commission This plan has been tested, and in Ihe event of a disaster, wll keep the organization functioning

10 Relatcd Party Transactlons

Several of the Directors af Jackson Purchase, its President & CEO and another employee are on the Boards of Directors of various associated organizations

11 Commitments

Jackson Purchase has various other agreements outstanding with local contractors Under these agreements, the contractors wll perform certain construction and maintenance work at specified hourly rates or unit cost, or on an as needed basis The duration of these contracts are one to three years

Continued

1 1


Page 14 of 14

12 Adverdas~ng

Jackson Purchase expenses advertising costs as incurred

13 Environmental Contingency

Jackson Purchase fiom time to time ts required to work wtb and handle PCBs, herbicides, automotive fluids, lubricants and other hazardous matenals in the normal course of business As a result, there is the possibility that environmental conditions may anse which would require Jackson Purchase to incur cleanup costs The likelihood of such an event, or the amount of such costs, if any, cannot be determined at this time However, management does not believe such costs, if any, would matenally affect Jackson Purchase's financial position or its future cash ff ows

14 New Accounting Standard

On September 29,2006, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No 158, Ehployers' Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No 87, 88, 106 and 132(R) SFAS No 158 requlres an employer that sponsors a defined benefit postretirement plan to report the current economic status (the overfunded or u n d e h d e d status) of the plan in i ts balance sheet, to measure the plan assets and plan obligatrons as of the balance sheet date, and to include enhanced disclosures about the plan The Cooperative wll be required to adopt the recognition and disclosure provisions of SFAS No I58 for the fiscal year ending December 3 1,2007, and the measurement date provision for the fiscal year endrng December 3 1,2008 The Cooperative does not anticipate adopting the provisions of SFAS 'No 158 pnor to those periods

12

Exhibit P

Depreciation Study

Exhibit P Page 1 of 29

United States Department of Agriculture Rural Development

July 3, 2007

Mr. Gary Joiner, Chairman Jackson Purchase Energy Corporation P.O. Box4030 Paducah, Kentucky 42002-4030

Dear Mr. Joiner:

We have completed the depreciation study of the Jackson Purchase Energy Corporation using historical data of the Corporation from January 1 , 1939 through December 31 , 2006. The study was conducted jointly by the Rural Utilities Service (RUS) and staff from the Corporation. Please find a copy of the study enclosed.

Two items were noted during the depreciation study field work which have a significant impact on depreciation rates. In a previous study, it was found that Corporation pe'rsonnel were not properly allocating labor between construction and retirement on their time sheets. This incorrect labor reporting had a significant impact on the depreciation reserves. Proper time reporting was discussed in detail with Corporation staff in July 2002 and the procedures were corrected. During a follow-up review of the labor reporting process in September 2002, it was noted that the Corporation had made considerable improvement in labor reporting for those three months. However, during the current study, our review of labor reporting practices indicated that Corporation personnel reverted to the previous practices of recording labor. Therefore, this study relied on the actual, current labor reporting practices. Second, the Corporation uses a modified vintage system to maintain its Continuing Property Records (CPRs). Plant retired is priced on a first-in, first-out basis using the average price for each annual vintage of additions. The amounts in existence at March 1, 1989, the date of the conversion from assembly units to record units, are considered the first vintage. Once those amounts are completely retired, the remaining 1989 amounts will be retired and then each yearly additions will be retired. Generally, RUS borrowers use a moving average of all years' additions to price retirements rather than a vintage system. Both of these items should be monitored closely for their effects on depreciation rates and reserves.

1400 Independence Ave, SW *Washington, DC 20250-0700 Web: http://www rurdev.usda.gov

Committed to the htture of rural communities

"USDA is an equal opportunity provider, employer and lender." To file a complaint of discrimination write USDA, Director, Office of Civil Rights, Room 326-W. Whitten Building, 14Ih and

Independence Avenue, SW.. Washington, DC 20250-9410 or call (202) 720-5964 (voice or TDD)

http://www

http://rurdev.usda.gov

Mr. Gary Jainer Exhibit P Page 2 of 9

The Corporation may select from two alternatives for setting depreciation rates at its discretion. The first alternative is that the Corporation may use rates from within the range of rates contained in RUS Bulletin 183-1, Depreciation Rates and Procedures, issued October 28, 1977. No specific RUS approval is required for selecting rates from within the RUS range of rates. The second alternative is that the Corporation may adopt, in their entirety, the rates developed by this study. If neither of these alternatives is adopted, the Corporation should contact RUS as soon as possible.

Based on the information provided in this study, RUS approves the depreciation rates for the primary plant accounts as detailed below:

Annual Account Number Account Title Depreciation Rate

362 Station Equipment 1.60%

364 Pole Towers and Fixtures 4.31 %

365 Overhead Conductor and Devices 3.59%

366 Conduit 1.69%

367 U/G Conductor and Devices 2.90%

368 Line Transformers 5.31 %

369 Services I .48%

370 Meters 3.99%

37 I Installations on Customers’ Premises 12.09% 373 Street Lighting and Signal Systems 3.47%

These rates are approved for a five year period beginning January 1, 2007. If the Corporation wishes to continue to utilize depreciation rates that fall outside of RUS’ prescribed ranges of rates beyond the five year period, a revised depreciation study updating this information must be performed.

Mr. Gary Joiner Exhibit P Page 3 of 39

If you have any questions or if we can be of any further assistance, please contact me at (870) 424-7147.

Sincerely,

ANTHONY S. BUNCH Field Accountant Rural Development Utilities Programs

Enclosure

cc: Mr. G. Kelly Nuckols, PresidentCEO Mr. Chuck Williamson, Vice-President-Finance & Administration


Introduction

summary

Analysis of Distribution Plant Accounts

Exhibit A - Iowa Curve and Average Service Life

Exhibit R - Allocation of Salvage, Cost of Removal and Net Salvage

Exhibit C - Theoretical Reserve Compared to Actual Reserve

Exhibit D - Computed Annual Depreciation Rate and Composite Rate

Exhibit: E - Summary of Remaining Lives

2

3

7

19

20

21

22

23

Exhibit F - Summary of Current & Proposed Depreciation Rates

Exhibit G - Schedule of Depreciable Property

24

25

1


urchase Energy Corporation Introduction

We have performed a depreciation study at Jackson Purchase Energy Corporation in Paducah, Kentucky (MY 20). This study was ajoint effort between personnel of the Corporation and RUS. The purpose of the study was:

1. To recommend appropriate depreciation rates based on estimates of average- life mortality characteristics and net salvage that will fidly recover the cost of the property, adjusted for net salvage, over its estimated life.

2. To determine the adequacy of the book reserve for depreciation at a point in time by comparing it with a theoretical reserve based on the same average lives, mortality characteristics, and net salvage as used to determine the recommended depreciation rates.

3. To determine, if necessary, some method to adjust the book reserve for past over or under-accruals as indicated by comparison with the theoretical depreciation reserve calculation.

4. To review in detail the history, status, procedures, and policies of the Corporation’s depreciation functions, records, and operating techniques.

Since there are many factors affecting estimates of depreciation rates and accrued depreciation and these factors are constantly changing, a depreciation study represents only the best judgment at the time the study is made. Actual results may vary from the forecasts and variations may be material. A review of depreciation should be made at least every five years so that the Corporation’s depreciation practices reflect these changes.

2


Jackson Purchase Energy Corporation summary

The overall results of the study indicate a proposed change to depreciation rates that will increase annual depreciation expense by approximately $469,766, when compared to the rates used by the Corporation during 2006. These rates were implemented January 1 , 2002 as the result of a depreciation study conducted by RUS and KY20 personnel. The rates implemented in 2002 replaced rates implemented by order of the Kentucky Public Service Commission (PSC) in Case No. 2000-527. This order reversed a prior PSC order of May 6, 1998 which implemented much higher depreciation rates based on a previous depreciation study.

Our study included a review of construction and retirement activity for distribution plant from inception (1 939) through December 3 1 , 2006. Prior to March 1989, the Corporation maintained its continuing property records (CPRs) on an assembly-unit basis. In March 1989, the Corporation converted its CPRs to a record-unit basis. The record-unit basis of maintaining CPRs is in accordance with the Uniform System of Accounts as issued by the Rural Utilities Service. The CPRs, having been maintained on an assembly-unit basis prior to March 1989, presented obstacles to conducting this study. There were considerably more units on the assembly-unit method and the conversion to record units sometimes resulted in several different record units from a single assembly unit. Additionally, at the time the conversion was made, dollar amounts were transferred among certain distribution plant accounts. Because of the complexity of the conversion of the assembly-unit method to record units, it was decided to perform this study as a combination of both the dollar method and unit method. Either of these conventions is accepted for depreciation studies.

General ledgers were available from 1939 for each individual plant account. Dollar additions and retirements data were collected from the general ledgers for use in the study. Additions and retirements on a unit basis were available from the CPRs back to 1939 for most items. This was on both an assembly-unit and record-unit basis. For those items that converted directly from assembly units to record units, the unit data was used in this study. For those other items that did not convert so readily, the dollar method was utilized.

The Corporation presently prices retirements using a first-in first-out vintage system where the items in service at March 1 , 1989, the time of the conversion to record units, are considered the first vintage. Once all items from the pre-March 1989 era are retired, then the remaining year 1989 vintage will be retired and then each subsequent year additions will be retired. Although the Corporation is maintaining CPRs on a vintage basis for additions, no association of retirements is made to the year installed. Therefore,

3



the Corporation does not have true vintage property records. This retirement pricing method results in less dollars being retired for current retirements than most other RUS borrowers that use the current moving average cost method for pricing retirements. This first-in first-out vintage method of pricing retirements results in a higher negative net salvage as a percentage of plant retired than the moving average method would and, therefore, higher depreciation rates.

This study was performed utilizing the “Iowa Type Survivor Curves”. These curves are frequently used by utilities for analyzing depreciation of property recorded on a mass unit basis. The curves analyze the life of mass property accounted for on the vintage basis. Vintage accounting is a system where plant is accounted for by year of installation and its life is identified as such through retirement. Since vintage accounting is not required by the uniform system of accounts, this type of record was not maintained for the mass plant items. Our study therefore used the technique of creating simulated plant records on a vintage basis.

The computer program that was utilized incorporates the Simulated Plant Record (SPR) method of analyzing data. Studies have shown that mass property kept on a vintage record basis generally fits the pattern of one of 3 1 Iowa survivor curves. Through additional studies it has been shown that, if plant is retired but not recorded on a vintage basis, it would still follow the pattern of one of these 3 1 curves. The SPR method of analyzing data tests the additions, retirements, and plant balances for each year to fit the data to the best curve for analysis.

The study of depreciation also utilizes the estimates of net salvage for the primary plant accounts. Net salvage is the result of combining salvage received for plant removed from service and the cost of removal. The Corporation maintains depreciation reserves for each of its distribution plant accounts. To calculate the net salvage percentages used in the depreciation study, an analysis of the RUS Form 7, Financial and Statistical Report, was made for the period 1989 through 2006. As a supplement to the RlJS Form 7, the Corporation maintains detailed plant account and reserve data for the Kentucky Public Service Commission. This data was used along with the RUS Form 7 data. However, based on the Corporation’s FIFO vintage CPRS and its method of recording and accounting for labor, the determination was made that the calculated net salvage percentages resulted in inappropriate depreciation rates. Generally the net salvage component of depreciation is derived by dividing the salvage estimate by the respective plant balance. However, two problems are noted in applying this methodology in Jackson Purchase’s case and these problems would result in inaccurate depreciation rates and improper allocation of costs. The first problem is the Corporation’s use of its hybrid FIFOhintage method of pricing retirements. The second problem is its practices of time reporting and resulting accounting for labor associated with capitalized projects and costs

4


Jackson Purchase Energy Corporation s m a r y

of removal. Therefore, for the purposes of this study and developing depreciation rates that reflect a proper allocation of costs for Jackson Purchase, techniques were developed to calculate the net salvage percentages which result in the most appropriate measure of depreciation. (Refer to Exhibit B, Net Salvage Study.)

The prior depreciation study net salvage percentages were adjusted due to the fact that labor allocations between construction and retirement were not proper. The Corporation was overallocating time to cost of removal on the basis of what appeared to be arbitrary allocation of time between construction and removal. Prior to completion of the 2002 study, the Corporation was requested to maintain specific detail of time by the outside crews on the time sheets and this was done for latest period. At the conclusion of the test period, it was determined that the Corporation had changed its labor reporting to result in a proper allocation of labor between construction and retirement. Net salvage percentages were adjusted to reflect the proper allocation of labor between construction and retirement. This resulted in a substantial decrease in the annual depreciation accrual. However, during the current study, an analysis of the depreciation reserve and labor reporting during the time period from 2002 through 2006 indicated that in fact the time reporting changes initiated during our last visit in 2002 to correct labor reporting was in fact short lived and not maintained through 2006. Time reporting reverted to an arbitrary percentage allocation. Thus, the actual results of the current net salvage study, which was calculated based on actual cost of removal, salvage, and original cost of plant retired, resulted in high negative net salvage percentages. The current net salvage component is based on the time reporting practices currently in use. As time reporting has a significant effect on the value of plant and depreciation rates, the Corporation should take steps to improve its time reporting practices.

Due to the fact that in future years, plant retired will be priced at higher prices, because of the hybrid FIFO vintage method, adjustments were made to the net salvage study to more properly reflect the expected results in the upcoming years. Our estimate for net salvage is a composite percentage based on the relative expected cost to remove each vintage. This methodology will need to be closely reviewed and adjusted as necessary in future depreciation studies.

For this study we utilized the whole life technique. The whole-life technique bases the depreciation rate on the estimated average service life of the plant category. Whole-life depreciation results in the allocation of a gross plant base over the total life of the investment. To the extent that the estimated average service life or net salvage assumption assigned turns out to be incorrect, the whole-life technique will result in a depreciation reserve imbalance. However, when a depreciation reserve excess or deficiency is reasonably certain, the whole-life technique may be modified to include an adjustment to the accnial rate designed to eliminate the reserve imbalance in the future.

5


Jackson Purchase Energy Co summary

Thus, when utilizing the whole-life method of accounting for depreciation, it is necessary to determine the adequacy of the depreciation reserve for each account. (Refer to Exhibit C, Comparison of Computer Calculated Depreciation Reserve to Actual Book Reserve.)

The depreciation reserve maintained by the Corporation as of December 3 1,2006 was on an account level. The Kentucky Public Service Commission requires that an individual depreciation reserve be maintained for each plant account. This was not always the case for the Corporation and, when individual depreciation reserves were established, it was accomplished based on a percentage of the plant account balance at the time. (Refer to Exhibit D, Computed Annual Depreciation Rate for Property Group.)

By simulating the plant balances and the depreciation reserve and allocating the net salvage, we were able to develop the average plant lives and calculate the plant balances, reserve balances, and annual depreciation accruals for distribution assets in service.

The most likely retirement patterns and average service lives were developed based on the SPR analysis. This information was then analyzed for appropriateness and a curve and service life were selected for each account. (Refer to Exhibit A, SPR Results.)

The simulated plant method indicated that for the year ended December 3 1,2006 the annual composite depreciation rate for distribution plant should be 3.69% and the depreciation reserve should be $33,278,723. The Corporation’s present composite rate for distribution plant is 3.25% and the depreciation reserve for distribution plant per the books at December 3 1,2006 was $28,496,721.

The Cooperative’s total current annual depreciation expense a c c d for distribution plant is $3,147,142. The proposed rates would yield an annual depreciation accrual of $3,616,908, or $469,766 more than the current rate.

Following is a summary of the proposed composite depreciation rates, current rates and the RTJS recommended maximum and minimum rates for distribution plant:

6


urchase Energy Corporation S m a r y

362 Substations 364 Poles Towers and Fixtures 365 O/H Conductor and Devices 366 Conduit 367 U/G Conductor and Devices 368 Line Transformers 369 Services 370 Meters 37 1 Installation on Customer’s Premises 372 Leased Property 373 Street Lights

1.60% 4.3 1% 3.59% 1.69% 2.90% 5.31% 1.48% 3.99%

12.09% 0.00% 3.47%

1.53% 4.19% 3.47% 1.77% 3.19% 2.75% 2.23% 4.34% 6.42%

10.00% 1.44%

2.7 3.2 3.0 4.0 2.3 2.8 1.8 2.3 2.4 2.9 2.6 3.1 3.1 3.6 2.9 3.4 3.9 4.4 3.6 4.1 3.8 4.3

1. The “Proposed” rates are the rates determined from this depreciation study.

2. The “Current” rates are those currently in effect at the Corporation as of the date of this study. These rates were implemented January 1,2001 resulting from the prior depreciation study conducted by RUS and KY20.

3. The RUS “High and Low” ranges of rates are those included in RUS Bulletin 183-1, Depreciation Rates and Procedures. As per the Bulletin, rates may be selected from within the range of rates without prior RIJS approval. The bulletin, however, also provides for rates higher or lower than those in the range when supported by an RUS approved depreciation study.

As noted above, the whole-life technique was used for allocating the gross cost of plant over the estimated useful life. To the extent the previous estimates of average life, salvage, or cost of removal were incorrect, this would cause an imbalance in the accumulated depreciation reserve. The theoretical reserve balance was, therefore, compared to the actual recorded reserve balance. The reserve imbalance at December 3 1, 2006 was $4,782,002. The differences between the book reserves and the theoretical reserves are being amortized over the remaining useful life by functional groups. The amortization of the reserve imbalances over the remaining lives of the plant was included in the proposed depreciation rates. (Refer to Exhibit C, Comparison of Computer Calculated Depreciation Reserve to Actual Book Reserve, and Exhibit D, Computed Annual Depreciation Rate for Property Group.)

7



The study findings are based on many factors and assumptions that were discussed with the Corporation’s personnel during our visit. Any changes in the assumptions could significantly impact the results of the study findings. In the hture, as plant is added and retired and methods and technology change, appropriate revisions to the study findings may be necessary. The Corporatian should consider the effects of such changes an an ongoing basis.

8


Jackson Purchase Energy Corporation Analysis of Accounts

(Note: During the study it was necessary to merge accounts with minimal activity but with similar life characteristics in order to get statistically valid results. Such accounts are listed below with multiple descriptions following a single account number.)

The account has a plant balance of $12,008,367.10, which is 12.23% of total distribution plant as of December 3 1,2006.

Using the simulated plant method with the Iowa curves, the average service life of assets within Account 362, Substations, is 42 years. The specific curve selection can be found in Exhibit A. The composite depreciation rate was calculated to be 1.60% compared to the current composite rate of 1.53%.

The proposed rate of 1.60% would yield a depreciation expense of $192,05 1.12. The current rate of 1.53% yields a depreciation expense of $183,728.02 for an increase in annual depreciation expense for this account of $8,323.10.

The estimated net salvage for this account is positive 27.38 percent. A positive net salvage is the result of the salvage value of retired assets exceeding the cost of removing them. The net salvage percentage was derived through an analysis of both gross salvage and cost of removal for a five-year period ending December 3 1,2006. (See Exhibit B for complete details.)


364.1 Poles 364.2 Anchors & Guys 364.3 Crossarms

- $1 8,471,716.24 64.84%

5,647,8 12.7 1 19.83% 4,367,0232 15.33%

Totals $28,486,552.14 1 00.00%

9



Using the simulated plant method with the Iowa curves, the average service life of assets within Account 364, Poles Towers and Fixtures, is 36 years. For this account, unit data for both poles and anchors R: guys was utilized to obtain the optiIllization calculations. In addition, the dollar-unit basis was utilized to obtain optimization calculations for account 364 as a whole (which included poles, anchor guys, and crossarms.) Based on the results of these calculations, it was determined that the curve and life selection generated by the pole analysis on a unit basis yielded the most valid results. This curve and life was then applied to the entire account on a dollar basis. As noted above, the poles units constitute 64.84 percent of account 364. The anchor guy units, which represent 19.83 percent of the account, had a similar result to the poles. Therefore, the curve and life selection were applied to the overall account. The composite depreciation rate was calculated to be 4.3 1 % compared to the current composite rate of 4.19%.

The proposed rate of 4.31% would yield a depreciation expense of $1,228,878.55. The current rate of 4.19% yields a depreciation expense of $1,193,586.53 for an increase in annual depreciation expense for this account of $35,292.01.

The estimated net salvage for assets within this account is negative 49.17 percent. A negative salvage rate is the result of the cost of removal exceeding the salvage. The net salvage percentage was derived through an analysis of both gross salvage and cost of removal for a ten-year period ending December 3 1,2006. The net salvage percentage was adjusted to reflect the effect of the FIFO vintage method of maintaining CPRs. (See Exhibit B for complete details,)

The Corporation had an unusual situation in 1989-1 990 when it purchased and installed approximately 4,000 poles that were of a poor quality and had to be replaced within a very short period of time. Owing to this unusual one-time event, data for both dollars and units relative to these poles were deleted from both additions and retirements during 199 1 through 1995 for purposes of the study.

10


urchase Energy Corporation Analysis of Accounts

The account has a plant balance of $17,054,966.32, which is 17.37% of total distribution plant as of December 3 1 , 2006.

365.1 Copper wire $145,453.44 0.85% 365.2 Aluminum wire 1 1,064,150.23 64.8 7% 365.3 Grounds 1,717,982.1 1 10.07% 365.4 Insulator strings 1,928,239.42 11.31% 365.5 Switches 1,317,229.37 7.72% 365.6 Cutouts and arresters 881,911.75 5.17%

$17,054,966.32 100.00%

Using the simulated plant method with the Iowa curves, the average service lives of assets within Account 365, Overhead Conductors and Devices, range from 25 years to 47 years. The specific curve selection for each account listed above can be found in Exhibit A. The composite depreciation rate was calculated to be 3.59% compared to the current composite rate of 3.47%.

The proposed rate of 3.59% would yield a depreciation expense of $6 12,166.89. The current rate of 3.47% yields a depreciation expense of $59 1,807.33 for an increase in annual depreciation expense for this account of $20,359.56.

The estimated net salvage for assets within this account is negative 33 percent. A negative salvage rate is the result of the cost of removal exceeding the salvage. The net salvage percentage was derived through an analysis of both gross salvage and cost of removal for a ten-year period ending December 3 1 , 2006. The net salvage percentage was adjusted to reflect the effect of the FIFO vintage method of maintaining CPRs. (See Exhibit B for complete details.)

The Corporation serves approximately 28,000 customers and has approximately 3,000 miles of line which is a mixture of 1-phase and 3-phase. About 500 customers are added annually. The wire is predominantly ACSR as indicated by the above totals. The current work plan indicates that approximately 500 miles of copper wire and 500 miles of #4 ACSR will be replaced in the next 4 years.

11



it


366.1 Conduit $3,848,148.05 93.70% 366.2 Enclosures and covers 258,586.80 6.30%

als $4,106,734.85 100.00%

Using the simulated plant method with the Iowa curves, the average service life of assets included in Account 366, Conduit, is 58 years. The specific curve selection for each account listed above can be found in Exhibit A. The composite depreciation rate was calculated to be 1.69% compared to the current composite rate of 1.77%

The proposed rate of 1.69% would yield a depreciation expense of $69,280.71. The current rate of 1.77% yields a depreciation expense of $72,689.21. This gives a decrease in depreciation expense for this account of $3,408.49 per year.

The net salvage for this account is negative 2.60%. A negative net salvage is the result of the cost of removal exceeding the salvage value of retired plant. The net salvage percentage was derived through an analysis of both gross salvage and cost of removal for a ten-year period ending December 3 1,2006. The net salvage percentage was adjusted to reflect the effects of the FIFO vintage method of maintaining CPRs. (Refer to Exhibit B for an analysis of net salvage.)

12




367.1 Cable $5,846,080.62 62.04% 367.2 Termination 1,748,371.48 18.55% 367.3 Switching Equipment 8 17,647.07 8.68% 367.4 Pads 1,011,367.36 10.73% 367.5 Conduit riser 0.00 -- 0.00%

$9,423,466.53 100.00%

TJsing the simulated plant method with the Iowa curves, the average service lives of assets included in Account 367, Underground Conductors and Devices, range from 25 to 35 years. The specific curve selection for each account listed above can be found in Exhibit A. The composite depreciatian rate was calculated to be 2.90% compared to the current composite rate of 3.19%

The proposed rate of 2.90% would yield a depreciation expense of $273,215.99. The current rate of 3.19% yields a depreciation expense of $3OOY608.S8. This gives a decrease in depreciation expense for this account of $27,392.59 per year.

The net salvage for this account is negative 2.40%. A negative net salvage is the result of the cost of removal exceeding the salvage value of retired plant. The net salvage percentage was adjusted to reflect the effects of the FIFO vintage method of maintaining CPRs. (Refer to Exhibit B for an analysis of net salvage.)

The majority of the old specification (old spec) underground cable that has caused the Corporation problems has been replaced with new jacketed cable. Any remaining old spec cable will be replaced in the near future. At this time, the reserve appears to be sufficient to cover this replacement but should be monitored as the replacement program proceeds.

Account 367.5, conduit riser, balance was moved to account 366.

13



This account has a plant balance of $15,623,839.04, which is 15.92% of total distribution plant as of December 3 1,2006.

368.1 Transformers $1 3,329,066.8 1 368.2 Cutouts and arresters 1,928,406.42 368.3 Capacitors 62,176.06 368.4 Regulators 304,189.75

85.31% 12.34% 0.40%

.- 1.95%

$15,623,839.04 100.00%

Using the simulated plant method with the Iowa curves, the average service life of assets in Account 368, Line Transformers, is 38 years. For purposes of the depreciation study, the model was run on this account entirely on a dollars basis. The specific curve selection for the account can be found in Exhibit A. The composite depreciation rate was calculated to be 5.3 1% compared to the current composite rate of 2.75%.

The proposed rate of 5.3 1% would yield a depreciation expense of $829,658.18. The current rate of 2.75% yields a depreciation expense of $429,655.57 for an increase in annual depreciation expense for this account of $400,002.6 1.

The estimated net salvage for this account is negative 58.49%. A negative net salvage rate is the result of the cost of removal exceeding the salvage value of retired plant. The net salvage percentage was adjusted to reflect the effects of the FIFO vintage method of maintaining CPRs. (Refer to Exhibit B for an analysis of net salvage.)

The Corporation accounts for the retirement of transformers differently than most rural electric cooperatives. As special equipment items, only the initial installation is capitalized. Subsequent retirements and installations are charged to expense. However, the Corporation records an entry transferring an amount from expense to the depreciation reserve when a transformer is permanently removed fi-om service. Very few rural electric cooperatives record this journal entry. Although this entry results in a more proper accounting for the removal of plant, it does result in a substantially higher cost of removal and thus a higher net salvage percent. The higher net salvage percent results in much higher depreciation rates for this account.

14



The Corporation purchases line transformers using a least-loss evaluation criteria. An effort is being made to more efficiently manage transformer loading by changing out transformers that are over- or under-sized for their current load.

ices

The account has a plant balance of $6,468,810.85, which is 6.59% of total distribution plant as of December 31,2006.

369.1 Overhead Services $1,643,334.3 1 25.40% 369.2 Underground Services 4,825,476.54 74.60%

$6,468,8 10.85 100.00%

Using the simulated plant method with the Iowa curves, the average service life of assets in Account 369, Services, is 40 years for overhead and 55 years for underground. The specific curve selection for each account listed above can be found in Exhibit A. The composite depreciation rate was calculated to be 1.48% compared to the current composite rate of 2.23%.

The proposed rate of 1.48% would yield a depreciation expense of $95,819.33. The current rate of 2.23% yields a depreciation expense of $144,254.48 for a decrease in annual depreciation expense for this account of $48,435.15.

The estimated net salvage is a negative 32.63% for the overhead service and 0% for underground services.. A negative net salvage rate is the result of the salvage value of retired plant being less than the cost of removal. Zero is used for underground since the cable is abandoned in the ground. (Refer to Exhibit B for an analysis of net salvage.)

15



The account has a plant balance of $2,934,243.34 which is 2.99% of total distribution plant as of December 3 1,2006.

370.1 Meters 370.2 Sockets

$1,792,432.32 61 . O W 0

3 8.9 1 yo 1,141.81 1.02

otals $2,934,243.34 100.00%

Using the simulated plant method with the Iowa curves, the average service life of assets in this account is 28 years. The specific curve selection for the account can be found in Exhibit A. The composite depreciation rate was calculated to be 3.99% compared to the current composite rate of 4.34%.

The proposed rate of 3 39% would yield a depreciation expense of $1 17,020.39. The current rate of 4.34% yields a depreciation expense of $127,346.16 for a decrease in annual depreciation expense for this account of $10,325.77.

The estimated net salvage for this account is projected to be a negative 6.81%. Although meters are special equipment items that do not have a cost of removal charged to the depreciation reserve, a small amount is charged to the depreciation reserve for non special equipment items maintained in this account. Also, Corporation accounting for meters is similar to that of transformers in that an amount is transferred fiom expense to the depreciation reserve when a meter is retired for the final time. (Refer to Exhibit €3 for an analysis of net salvage.)

The Corporation is in the early stages of implementing an automatic meter reading system. The implementation of such a system could have a substantial impact on the depreciation rates for this account. This situation should be monitored very closely in the hture and rates should be adjusted to reflect the implementation of the automatic meter reading system, if necessary.

16



The account has a balance of $1,484,793.67, which is 1.5 1 % of total distribution plant as of December 3 1,2006.

371.1 Security lights 3 7 1.2 Generator

$1,399,605.27 85,188.40

94.3 0% 5.70%

$1,484,793.67 100.00%

Using the simulated plant method with the Iowa curves, the average service life of the assets in this account is 24 years. The specific curve selection for this account can be found in Exhibit A. The composite depreciation rate was calculated to be 12.09% compared to the current composite rate of 6.42%.

The proposed rate of 12.09% would yield a depreciation expense of $179,450.43. The current rate of 6.42% yields a depreciation expense of $95,323.75 for an increase in annual depreciation expense for this account of $84,126.67.

The estimated net salvage for this account was determined to be negative 90.42%. This results from cost of removal of these items exceeding the salvage value of the retired items. The net salvage percentage was adjusted to reflect the effects of the FIFO vintage method of maintaining CPRs. (Refer to Exhibit B for an analysis of net salvage.)

This account includes only security lights installed on customers’ premises and excludes the poles and wire associated with the security lights. The poles and wire are included in accounts 364 and 365, respectively, The security lights include both mercury vapor and high-pressure sodium with no problems being experienced with either type.

The generator included in this account is the one from account 372 in the prior study. This item was moved to this account during the current study period along with the related accumulated depreciation.

There is a substantial increase in the depreciation rate for this account. The net salvage study resulted in a much higher negative amount due to the fact that the price of the security lights for the vintages subsequent to 1989 are lower. The fact that the price of security lights has decreased over the years means that the net salvage percent will increase as these lower priced lights are retired.

17



This account has a balance of $1,047.60. The only items in this account are some temporary services. The depreciation reserve, per the Corporation’s general ledger for this account, is a negative $10 1,973. This resulted fiom the retirement of temporary services which were previously included in this account. On Schedule C, this deficiency was taken from Account 369 since this account was significantly over-depreciated. The balances in this account for both plant and accumulated depreciation should be moved to account 369 and the related depreciation reserve. That will result in the balances for account 372 being zero.

ts

The account has a plant balance of $558,137.96, which is .57% of total distribution plant as of December 3 1 , 2006.

373.1 Street lights $558,137.96 100.00%

Using the simulated plant method with the Iowa curves, the average service life of assets in this account is 42 years. The specific curve selection for the account can be found in Exhibit A. The composite depreciation rate was calculated to be 3.47% compared to the current composite rate of 1.44%.

The proposed rate of 3.47% would yield a depreciation expense of $19,365.96. The current rate of 1.44% yields a depreciation expense of $8,037.19 for an increase in annual depreciation expense for this account of $1 1,328.78.

The estimated net salvage for this account is projected to be a negative 36.06%. A negative net salvage results when the cost of removing the plant exceeds the gross salvage of the retired plant. The net salvage percentage was adjusted to reflect the effects of the FIFO vintage method of maintaining CPRs. (Refer to Exhibit B for an analysis of net salvage.)

18

Jackson Purchase Energy Corpomffon

Account Pmuem GWUD Name Numbsr

Distribution Plant

362.1

364.i

365.1 365.2 365.3 365.4 365.5 365.6

366.1 366.2

367.1 367.2 367.3 367.4 367.5

368.1

369.1 369.2

370.1

371.1

372.1

373.1

Substations

Poles, Towem B Fixtures

Copper Wire Aluminum Wire Grounds Insulator Strings Switches Cutouts and Arresters

Conduit Covers

Cable Terminators Switching Equipment Pads Conduit Risers

Transformers

OIH Services UIG Services

Meters

Security Lights

Leased Property

Street Llghts

Method -

S

S

S S S S S J

S J

S S S S

AveraueSewke Comwslte - Curve LUeYears

LO 42

LO 36

LO 35 L 1 47 1. 0 37 L 3 28

S 1.5 30 25

sc 58 s c 58

S I 35 R 1 28 R 4 25 R 1 35

Moved to account 366.1, conduit

S R 1 5 38

S LO 40 S R 2 5 55

S R 2.5 28

S s c 24

Moved to account 371 1

S R 2 42

Remalnlw We

34

28

16 30 26 14 16 15

54 53

25 22 14 28

25

23 42

14

14

33


Exhibit A

Net Salvaqe Conformance Retirement

27 38

(49 17)

(33 00) (33 00) (33 00) (33 00) (33 00) (33 00)

(2 60) (2 60)

(2 40)

(2 40) (2 40)

(2 40)

(58 49)

(32 63) 0 00

(6 81)

(90 42)

(36 06)

lnden

37 52

14 82

23 53 10 57 45.50 15 91 42 77

18 39 0 37

107 87 53 79 38 12 81 30

63 53

12 26 58 62

18 26

13 45

51 57

Exuer. Index

73 80

81 92

83 54 63 90 80 56

100 00 90 65

30 70 20 30

58 13 65 00

100 00 49 19

89 13

91.42 18 51

100 00

94 80

84 06


m

I

H

f c

Jackson Puffihase Eneqy Corpomtion


Exhibit C

Cornpawion of Computer Calculated Bepreciation Reserve ( i n c ~ u ~ i ~ ~ et Salvage) to Actual Book Resew@

-- Amount pumtmr PmwPr(v Group Name

Dlstrlbutlon Plant:

362.t

364.1

365.1 365.2 365.3 365.4 365.5 366.6

366.1 366.2

367.4 367.2 367.3 367.4 367.5

368.1

369.1 369.2

370.1

371.1 371.2

372.1

373.1

Substations

Poles, Towels 8, FIxtures

Copper wlre Aluminum Wlre Grounds Insulator Strlng Swltches Cutouts and Arrester8

Conduit Coven,

Cable Teminators Swltchlng Equlpment

Conduit Rlsers

Transformers

Pad5

OM sawices -wire I/ U/G Services - Wlre

Meters (k Equlpment

Llghts Generator 2!

Leased Property 4 I 21

Street Lights

Computer Calcuirsted Reserve

$665,415 46

I 1.9ee,242.93

367,803 41 3,847,741 10

328.413 72 1,002,647 85

772,564 54 282,211 52

374,210 04 83,425 24

1,012,152 18 386,572 11 353,003 68 136,045 06

8.165.323.95

251.452.50 370.749.42

1210,639.37

1,527,396 90

144,711 77

actual - Book pesewa

-

$1,264,923 01

10,628,841 71

5,642,593 18

652,016 38

2,448,410 75

3,610,938 32

2.313.895 09

1,163,276 09

628,183 82 40,506 27

103.1 36.37

Difference Composite Amortlzatlon ComDutar Remalnlnp of Reserve

&& ~ExcessUDaflclency w&?.!s

($599,507.55)

1,367,401.22

958,788 96

(194,381.10)

(560,637.72)

4,554,385 63

(1,691,693 17)

47,363.28

858.706.81

0.00

41,575.40

34 ($17,575 71)

28 48.506.61

26

54

36,881.02

(3,617.38)

24 (23.819 85)

25 179,731.08

37 (45,771 99)

14 3,467 30

14 61,644 42

33 1,241 80 -

$33,278,722.75 $28,496,720.99--- $4,782,001.76 $240,687.29

I/ The actual accumulated pmvision for depmclation for Account 369, Services, amounted to $2,415,868.34 at 12/31/06 For purposes of this study, the negative accumulated provision for depreciation of $101,973 25 in Account 372, Leased Property on Customers' Premises, was reclasslfied to the accumulated provision for depreciation for Account 369. Also for purposes of this study. the $1,047.60 asset balance in Account372 was reclassified to Amount 369. Except for e standby generator (see a/ below) located on a customer's premlses. Account 372 was being used to account for temporary service assets Thus, we deded to allocate the nwstandby generator asset and negative accumuleted depredation balances in Account 372 to Account 369 for purposes of this study.

2/ The actual accumulated provision for depreciation for Account 371, Installations on Customer Premises, amounts to $668.690.09. Of this amount, $85.188.40 pertains to a standby generator installed on a customer's premises in December 1999 and the balance of the account represents the investment in sewrityllghts in February 2005, the cost ofthe standby generator ($85,188.40) was reclassified tmm Account 372 to Account 371 and the associated accumulated depreciation ($30,023 84) was transferred from Account 108.672 to Account 108.871, respectively An additional $10,482.43 of depreciafion was acuued on the standby generator fmm February 2005 through December 2 0 6 increasing the accumulated deprecialiw, on the standby generator to $40,506.27 Using the wrrent annual depreciation rate of 6.42% for all assets in Account 371, it will take slightly in excess of 8 years to fully depreclate the generator. Thus, the generator is expected to have a total estimated service life of 15 years.

21

JBC~SOPI Purchase Energy Copomrfion


Exhibit D

Accoun( Account Tltle &gq@g and PmDertv 0 roue

362.1 Substetions

364.1 Poles, Towers Ib Fintures

365.1 Copperwire 365.2 Aturnhum Wre 985.3 Ground6 365.4 Insulator Strings 365.5 Switchas 365.6 Cutouts and Arresters

Subtotal Acct 366

366.1 Condun 366.2 Covers

Subtotal Acct 366

367.1 URD - Cable 367.2 Termlnstors 967.3 W c h l n g Equlpmml 367.4 Arresters 8 Pads 367.5 Condult RLsers

Subtotal Acct. 367

366.1 Tranafoners

369.1 OMServIces 369.2 UIG Servlces

Subtotal Acct. 369

370.1 Meters

371.1 SecuMy WgMe

372.1 Leased Pmparty

374.1 Streat Ughta

Total Dl~trtbution Plant

Computed Annual Depreciation Rate for Property Group

pmottlzatbn CPR Net C0rnoutt.g DeDreclatlon Peorecfetion of Reserve Comoos@ - & Sewke ufe &&. Eapanss ~ExcessvDeficlency &&

$12.008.367 10 27 38% 41 6 1 75% $209,626 83 ($17,575 71) 160%

28,486,552 14 -49 17% 36 4 14% 1,180,371 04 48,508 61 4 31% 145,453 44 -33 00% 349 381% 5,54307

11,064,15023 -33aO% 47 4 281% 310,44978 1,717,982 11 -33 00% 36 9 3 60% 61,921 85 1,928,239 42 -33 00% 27 8 478% 92,25030 1,317,229 37 -33 00% 30 1 4 42% 58.203 16

881.911 75 -3300% - 25 532%- 46.91771- . 17,054,966 32 575.285 87 38,881.02 3 59%

3,848,148 05 -2 60% 57 8 178% 88.30796 258.586.80 3.80% 57.8 1.78% 4,590.14

4,106,734 85 72,898 10 (3,617 38) 1 89%

5,648,080 63 -2 40% 1,748,371.48 -2,40%

817,647.07 -2 40% 1,011,367 36 -2 40%

353 2 90% 169,586.02 28 366% 63,940.44

4 10% 33,490.82 34.5 2 97% 30.018 56 25

- 9,423,486 54-- 297,035 84 (23,819 85) 2 80%

15,623,839 04 -58 49% 38 1 4 16% 649,927 10 179,731 08 5 31%

1,643,334 31 -32 63% 40 332% 56,48886 4,825,476 54 0 00% 55 4 1.6f % 67,102 46 6,488,810 85 141,591 32 (45,771 99) 1 4 8 w

2,934,243 34 -6 81% 27 8 3 87% 113,553 00 3,467 30 3 99%

1,464,793 67 -90 42% 24 793% 117,80600 61,64442 1200%

1,04760 000%

558,137 96 -36 06% 41 9 3 25% 18.124 16 1,241 80 3 47%

$98,150,959 I 41 $3,376,220.26 $240,68729 - 3 69% -

22

Account

365.3

365.6

366.6

367.1 367.2 3 3 3

368.1

369.1

372.1

373.1

ccownt - Title

Poke, Towers B Fixtures

C A re Grounds lnsulat~~ Strings Switches

Cable

Total Account 369

Le rope

Street Lights

34

28

16 30 26 14 16 15

54 53

25 22 14 28 0

25

23 42

14

14

0

33

$12,008,367. 1 0

28,486,552. 1 4

145,453.44 11,064,150.23 1,717,982.11 1,928,239.42 1,317,229.37


Exhibit E

$409,605,401.78 3

803,035,904.83 28

2,369,436.54 336,571,450.00 44,272,398.97 26,146,926.54 20,785,879.46

881,911.75 13,228,676.25 17,054,966.32 443,374,767.75

3,848,148.09 206,953,402.1 3 258,586.80 13,723,201.48

4,106,734.85 220,676,603.61

5,846,080.63 1 44,047,426.72 1,748,371.48 38,289,335.41

817,647.07 11,201,764.86 I ,011,367.36 28,257,604.04

0.00 0.00 9,423,466.54 221,796,131.03

15,623,839.04 395,908,081.27

1,643,334.31 37,714,522.4 1 4,825,476.54 201,367,136.01 6,468,810.85 239,081,658.43

2,934,243.34 40,081,764.02

1,484,793.67 20,683,175.82

1,047.60 0.00

558,137.96 18,686,458.90 $98,150,959.41 $2,812,929,947.45

2

2

2

37

i

1

33

23

Class and Title of Plant Account

Distribution Plant:

Substations Poles, Towers Ih Fixtures OW Conductor ik Devices Conduit URD Conductor 8 Devices Transformers Serwims

eters

ACCQMnt Number

362.00 364.00 365.00 366.00 367.00 368.00 369.00 370.00

Installation Customer's Premises 371.00 Leased Property 372.00

Lights and Signal Sysbms 373.00


Exhibit F

Depreciation Rate Annual

- Rate - Rat@ Curr. Rate Prop. Rate Difference Current ProDosed Deprtnciation at

1.53% 4.19% 3.47% 1.77% 3.19% 2.75% 2.23% 4.34% 6.42% 10.00% 1.44%

1.60% 4.31% 3.59% 1.69% 2.90% 5.31 % 1.48% 3.99%

12.09% 0.00% 3.47%

$183,728.02 1,193,586.53

591,807.33 72,689.21

300,608.58 429,655.57 144,254.48 127,346.16 95,323.75

104.76

$192,051.12 1,228,878 55

61 2,166.89 69,280.7 1

273,215.99 829,658.18 95,819.33

117,020.39 179,450.43

0.00

$8,323.10 35,292 .O I 20,359.56 (3,408.49)

(27,392.59) 400,002.61 (48,435.15) (10,325.77) 84,126.67

(104.76) 8,037.19 19,365.96 11 :328.78'

$3,147,141.59 $3,016,907.55 $469,765.96

Glass and Title of Plant Account

Distribution Plant Substatlons Poles, Towers 8 Fixtures OH Conductor & Devices Conduit URD Conductor ih Devices Transformers SewiC85

tion Customer‘s Premises Leased Propetty L ight ;and Signal Systems

Account umber

362.00 364.00 365.00 368.00 369.00

369.00 370.00 371.00 372.00

368.00

Depmciation Account Resews - Balance Balance - Plant

et

$12,008,367.10 28,486,552.14 17,054,966.32 4,106,734.85 9,423,466.54 15,623,839.04 6,468,810.85 2,934,243.34 1,4&4,793.67

1,047.60

$1,264,923.01 10,628,841 “71 5,642,593.1 8 652,016.38

2,448,410.75 3,610,938.32 2,415,868.34 1,163,276.09 668,690.09 (1 01,973.25)

$10,’743,444.09 17,857,710.43 11,412,373.14 3,454,718.47 6,975,055.79 12,012,900.72 4,052,942.51 1,770,967.25 816,103.58 103,020.65

393.00 558,137.96 103,136.37 455,001 59 $98,150,959.41 $28,496,720.99 $69,654,238.42


Exhibit G

25

Exhibit Q

Computer Software Used in the Compilation of This Application and Related Materials

Exhibit Q page 1 of 1

Witness: Chuck Williamson

1 2 3 4 5 Jackson Purchase Energy Corporation 6 Case No. 2007-001 16 7 December 31,2006 8 9 Computer Software Programs 10 1 1 12

Jackson Purchase Energy Corporation has used Microsoft Excel and Word in the preparation of this Application.

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JACKSON PIJRCHASE ENERGY CORPORATION cases/2007-00116/JPEC... · 2007. 12. 7. · JACKSON PIJRCHASE...

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